Rees v Peters (2011)

Summary

On its true construction, and in the light of subsequent events, a clause contained in a 1957 conveyance entitled the successors in title to the benefit of a restrictive covenant contained in that original conveyance.

Facts

The appellants (R) appealed against a decision that a restrictive covenant contained in a conveyance was unenforceable against the respondent (P). R had bought a property in 2003. A conveyance of the property in 1957 contained a covenant by the then vendor (F) in favour of the purchasers, restricting the use of land retained by F. Clause 6 of the conveyance, stated that "The Vendor hereby covenants with the Purchasers and their successors in title...". Clause 6(ii) stated that the covenant was "for the benefit of the property hereby conveyed, or the part thereof for the time being remaining unsold and every part thereof". The covenant was registered and in each of the three conveyances, in 1980, 1985 and 1987, leading up to R's purchase of the property, the benefit of the covenant in cl.6(ii) was assigned by the respective vendors to the respective purchasers. In 1990 P had bought the land originally retained by F, subject to the covenant. However, when the land was registered there was no reference to the covenant. R sought a declaration that the covenant was valid and binding on P and an order rectifying the Charges Register. The judge concluded that as R's property had been sold subsequent to the 1957 conveyance the covenant was no longer enforceable against P. The issues to be determined were (i) whether on the true construction of cl.6(ii) the benefit of the covenant continued and was annexed to the property despite its sale by F in 1980; (ii) if so, whether the Charges Register should be rectified by the addition of the covenant as an encumbrance on the registered title to P.

Held

(1) The starting point was the opening part of cl.6. It was on its face a covenant with "the Purchasers and their successors in title" which would include successors in title to the whole property. The question then was whether that express reference to successors in title was cut down by cl.6(ii). To ensure that the benefit of the restrictive covenant in cl.6(ii) ran with the land without the need for a chain of assignments, it was necessary that it should be annexed to the land and that was what the opening words of cl.6(ii) sought to do. The word "or" pointed to a clear contrast between the whole and a part. The words "remaining unsold" qualified the part not the whole. On that basis, successors in title to the whole were entitled to the benefit of the covenant. That construction was in accordance with the words used and produced a more sensible result than the alternative, in that the covenant would continue to protect R's property as long as it was sold on as a whole. The judge's construction limited the benefit of the covenant to the 1957 purchasers which gave minimal effect to the opening words of cl.6. Therefore, on the proper construction of the 1957 conveyance, and in the light of subsequent events, R were entitled to the benefit of the covenant contained in cl.6(ii) (see paras 11-13 of judgment). (2) The onus was on R to satisfy the court that an order for rectification should be made and they had discharged that burden. An award of compensation was of little value when compared with specific enforcement of the covenant. It was clear that P had at all times had actual notice of the covenant and it would be unjust not to order the alteration. The Charges Register should therefore be altered to add a reference to the covenant (paras 19-24).